Perks v Community Corporation 024302 INC - [2013] SADC 153

District Court of South Australia
(Civil)
PERKS v COMMUNITY CORPORATION 024302 INC
[2013] SADC 153
Judgment of His Honour Judge Soulio (ex tempore)
15 November 2013
REAL PROPERTY
Plaintiff brought application pursuant to s 142 Community Titles Act to resolve dispute with Community Corporation. Orders made pursuant to s 142(8) of that Act.
Community Titles Act 1996 ss 19, 102, 142; Development Act 1993 , referred to.

PERKS v COMMUNITY CORPORATION 024302 INC
[2013] SADC 153
The Application

The Community Titles Act 1996 (SA) (‘the Act’) provides for the division of land into lots and common property, and provides for the administration of the land by the owners of the lots.
Part 14 of the Act sets out a mechanism for the resolution of disputes and relevantly provides that the owner or occupier of a community lot, or a Community Corporation, may apply for relief under the Act. In particular, s 142(1)(d) provides that an application may be made pursuant to the Act if a dispute arises between a Community Corporation and a member of the corporation, or indeed between two or members of a corporation, in relation to any aspect of the occupation or use of a lot.
Section 142(7) provides that a court, in hearing and determining an application under the section should act according to equity, good conscience and the substantial merits of the case, without regard to technicalities and legal forms, and is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks fit.
The court is granted wide powers to deal with any such application, and pursuant to s 142(8), may, amongst other things, attempt to achieve settlement of the proceedings by agreement between the parties; or order that a party take such action as is, in the opinion of the court, necessary to remedy any default, or to resolve any dispute. The court may also vary or reverse any decision of the corporation, or of the management committee of the corporation or of a delegate of the corporation; and make orders as to costs, and may make any incidental or ancillary orders.
The Dispute
A dispute arose between the plaintiff, a lot owner, and the defendant Community Corporation, in relation to the erection of two pergolas on the terrace of the top floor of the building in which the plaintiff is a lot owner.
Quite properly, an application has been made in this Court to resolve the issues between the parties.
Section 102 of the Act relevantly provides that:
(1) a person must not carry out prescribed work in relation to a strata Lot unless the person is authorised to do so –
…
(b) … by special resolution of the Community Corporation.
The erection of the pergolas is prescribed work.
The Secondary By-laws applicable to Community Plan No. 024302 provide:
A person bound by these by-laws:-
“58.8 must not change the use or alter the character of the Lot or make or permit to be made any additions or alterations of any kind in or to the Lot unless the said person has complied with the provisions of by-law 16”
Provision 16.1 of the by-laws provide:-
Renovation and Refurbishment of Lots
16.1A Lot holder or Occupier shall not perform or carry out any prescribed work to or upon the Lot unless:
16.1.1such person has submitted a proposal for such refurbishment, renovation, alterations or additions to the Corporation for its consideration and referral (at the option of the Corporation) to an architect of its choosing;
16.1.2such person has consulted with the architect appointed by the Corporation to advise it in respect of such refurbishment, renovation, alterations or additions and paid to the Corporation the costs incurred by the Corporation of engaging such architect;
16.1.3such person has obtained all necessary consents or approvals from any government or statutory authority pertaining to such alterations or additions and shall upon request from the Corporation provide the Corporation with a copy of any such consents or approvals;
16.1.4such person obtains the consent of the Corporation by special resolution at least fourteen (14) days before the commencement of such prescribed work; and
16.1.5such person has made prior arrangements with the Corporation in relation to permitting persons such as workers in the Lots and make sure that such workers have appropriate current public liability insurance cover.
The plaintiff commenced the erection of the two pergolas without first obtaining the consent of the defendant by special resolution at least 14 days prior to the commencement of the prescribed work. She did so in the apparent belief that she was entitled to do so because she had given detailed consideration to the erection of such pergolas prior to taking possession of the apartment in question, and while the development was in the design stage.
Ultimately, an Extraordinary General Meeting (‘EGM’) of the Community Corporation was held, on 19 December 2011, to consider an application for a special resolution authorising the construction of the pergolas. The management committee of the Community Corporation determined that the result of the vote was such that the resolution was lost, and accordingly permission was not granted to proceed. A direction was given that the partially constructed pergolas be removed.
Issues have arisen as to the electoral process, the use of proxies, and the accuracy of material disseminated by the plaintiff, and by two individual Lot owners, the latter of which was contained in a letter signed by the two individual Lot owners, but describing them as members of the management committee. That may have given the impression that the letter was a letter of the management committee, or authorised by the management committee. It was neither.
Relief Sought
The plaintiff sought a declaration that the outcome of the vote on the motion at the EGM constituted a special resolution authorising the erection of the plaintiff’s pergolas; a declaration that the erection of the plaintiff’s pergolas may lawfully proceed without further resolution of the defendant; and a declaration that the defendant was not entitled to count proxy votes in determining the outcome of the motion. The plaintiff sought an order directing the defendant to correct the minutes of the EGM to reflect an order that the outcome of the vote constituted a special resolution authorising the erection of the plaintiff’s pergolas.
In the alternative, the plaintiff alleged by her pleadings, that if the motion was not passed, either as a special resolution or at all, the failure to pass the motion was unreasonable, oppressive and unjust within the meaning of s 142(1)(c) of the Act.
Pursuant to that section, the plaintiff sought, in the alternative, a declaration that the recorded resolution was unreasonable, oppressive and unjust; a declaration that the recorded resolution was invalid; and an order reversing the recorded resolution and substituting a special resolution granting authorisation pursuant to s 102 of the Act.
Factual Background
Much of the factual background to the dispute was not controversial. The following narrative sets out my preliminary findings unless otherwise indicated, although at this stage it is not necessary to make definitive findings in relation to those matters which remain controversial.
In about 2004 a construction company, Urban Construct Pty Ltd, (Urban Construct) engaged in the conversion of a former hotel building and associated hotel facilities, which had been known as Hotel Australia, into an apartment building with ground floor commercial premises. The development is situated at 61-69 Brougham Place North Adelaide, and known as Place On Brougham. During the course of undertaking the development, Urban Construct marketed the apartments in the development for sale.
In 2005 the plaintiff and her former husband entered into a contract with Urban Construct, to purchase what later became Lot 801 of Secondary Community Plan No 024302, and known as apartment 801.
The contract was subject to a number of conditions, including the deposit by Urban Construct of a plan of community division, creating, amongst other things, a community lot relating to apartment 801, pursuant to the Act. The contract was varied by agreement between Urban Construct and the plaintiff, on 27 August 2007.
Apartment 801 is one of two apartments located on the upper most level of Place On Brougham, to the eastern side. Apartment 802, located to the west, came to be owned by a Mr Speakman.
Apartments 801 and 802 each had an associated terrace area, which comprised a Lot subsidiary, within the meaning of s 19(3)(d) of the Act.
From about 8 May 2006 the plaintiff sought quotations for the construction of pergola structures for shade purposes, on the south facing part of the terrace of apartment 801, and on the east facing part of the terrace. Plans of the proposed pergolas were prepared, but ultimately construction was deferred. The plaintiff, who suffers an autoimmune disorder exacerbated by direct or prolonged exposure to sunlight, intended at all times that pergolas would ultimately be constructed.
On 30 October 2007 primary strata plan 024301 and secondary strata plans 024302 and 024303 were deposited. On the same date the defendant entity was established pursuant to s 71(1) of the Act, upon deposit of plan 024301 which comprises 99 community lots. The inaugural meeting of the defendant was convened on 2 November 2007. The plaintiff became the registered proprietor of apartment 801 on 5 December 2007.
On 17 September 2009 the plaintiff says that she wrote to the members of the management committee of the defendant, advising of her intention to construct the pergolas and received no response. There is an issue as to whether that letter was sent to all members of the management committee.
On about 4 February 2011 the plaintiff sought development approval from the City of Adelaide, pursuant to the Development Act 1993 (SA), for the construction of certain pergolas, differing in some material aspects from the construction proposed prior to taking possession of apartment 801. On 27 September 2011 such development approval was granted.
Shortly thereafter the plaintiff commenced construction of the pergolas and substantially completed that construction. The plaintiff asserts, and it appears to be common ground, that the pergolas were constructed wholly within the lot subsidiary of Lot 801, namely the terrace, such that they did not encroach outside the community parcel, or onto common property or another lot; that the pergolas, including their structural supports, fitted within the nominated colour scheme, and were professionally installed.
By email of 7 November 2011 the plaintiff was informed by the Community Corporation manager, Whittles Management Services Pty Ltd (‘Whittles’), on behalf of the defendant, that she was required to seek and obtain approval from the defendant to erect the pergolas. She responded the same day by email, and referred to her letter of 17 September 2009, over two years earlier, pointing out that no objection had been taken to her letter notifying of her intention to construct the pergolas. She received a reply from Whittles, reiterating that approval was required.
On 11 November 2011 Whittles sent an email to the members of the management committee of the defendant seeking to convene a meeting to discuss the issue relating to the construction of the pergolas. On 15 November 2011 the plaintiff addressed a meeting of the management committee of the defendant, setting out the history relating to the construction of the pergolas. That meeting was subsequently adjourned to 23 November 2011 at which time the management committee resolved that the plaintiff required approval from the defendant for the construction, pursuant to s 102 of the Act.
In late November 2011 the plaintiff made application to the defendant for approval of construction of the pergolas. On 2 December 2011 all lot owners were notified of the plaintiff’s application, given written notice of an EGM and of a motion which would consider the plaintiff’s application, and were provided with a copy of the plaintiff’s email of 7 November 2011 explaining her position and seeking endorsement of the application.
On 13 December 2011 Mr Renton and Mr Speakman, lot owners, and incidentally members of the defendant’s management committee, distributed a letter to all lot owners, headed “Vote No to application to permit the erection of two pergolas on the Lot subsidiary of the penthouse Lot 801”.
Voting on the motion at the EGM was by way of ballot, and 25 votes were cast by ballot, 13 in favour of the motion, and 12 against the motion. The plaintiff asserts that the motion was thereby validly passed. The defendant asserts that, when proxies were also taken into account, the motion was lost. At this stage, I do not need to decide the dispute relating to the outcome of the vote.
Subsequent to the EGM, Whittles sent a letter dated 5 January 2012, on behalf of the defendant, giving the plaintiff 28 days in which to remove the pergolas.
Disposition
Having heard detailed submissions in opening from counsel for each of the parties, having read the affidavits received into evidence, and heard the evidence of all witnesses, with the exception of evidence on a narrowly confined issue, in respect of which the plaintiff was to be recalled, and consistent with the powers provided to the court by s 142(8) of the Act, I invited the parties to consider their respective positions, and provided my preliminary views as to certain aspects of the evidence.
I would be prepared to make findings, by way of preliminary findings, that the plaintiff held the belief that having planned to erect pergolas on the southern and eastern side of the terrace, and having negotiated with the original developers and builders to do so, she was entitled to proceed to erect pergolas. I find however that she was mistaken in that belief and that a special resolution of the Community Corporation was required to approve the construction.
The information provided to lot holders, by both the plaintiff, and by those opposed to the application to erect the pergolas, contained some errors and inaccuracies, which had the potential to influence lot holders in the exercise of their votes.
In those circumstances, I have come to the view that the appropriate course is that the plaintiff make a fresh application, separately in relation to each proposed pergola, for approval by the lot owners, by way of special resolution at a general meeting.
Summary and Proposed Orders
After hearing further submissions of counsel, and at the risk of some repetition, I make the following observations by way of summary:
On 19 December 2011 a motion was before a general meeting of the Community Corporation seeking authorisation for the erection of a Vergola on the southern terrace and a veranda on the eastern terrace of Lot 801, owned by Ms Perks.
The motion failed.
Ms Perks has challenged the outcome of that motion on various grounds.
Prior to handover of apartment 801, Ms Perks had engaged in discussions with Urban Construct (the developer) and Woodhead International (the architect) with a view to Vergola type structures being built on the southern and eastern terraces of her apartment, as part of a package of variations to her building contract with Urban Construct. However, due to the quoted costs of the variations, no formal agreement was reached between Ms Perks and Urban Construct with regard to these structures. Plans to build the structures were deferred, with Ms Perks intending to revisit the works through alternative contractors after handover.
Ms Perks obtained the necessary Council planning consent on 28 April 2011, certified building rules consent on 7 September 2011 and Council development approval by 26 September 2011.
She arranged for work to commence on the structures soon after that.
However, under s 102 of the Act, and the relevant By-laws of the Community Corporation, the authorisation of the Community Corporation was still required for the structures.
The management committee of the Community Corporation called a special general meeting for 19 December 2011 to consider amongst other things Ms Perks’ application for authorisation to erect the structures.
The information provided to lot owners, by both the plaintiff, and by those opposed to the application to erect the pergolas, contained some errors and inaccuracies, which had the potential to influence lot owners in the exercise of their votes.
Further, the ‘Vote No’ letter signed by two members of the management committee was not from the management committee.
These matters may have operated to cause some confusion at the time the motion was considered as to what approvals had been obtained, and what further authorisation was necessary for the structures to be built.
In light of the potential confusion that existed on 19 December 2011 as to the issue of approvals, and the unlikelihood of a final judgment in these proceedings assisting the harmony between owners and residents, in my view it is appropriate that the members of the Community Corporation be given another opportunity to consider the issue.
Ms Perks has decided voluntarily to remove the southern Vergola pending consideration by the Community Corporation of an alternative design. In this way she hopes to allay concerns of members that she ‘jumped the gun’ in building the original structure.
As I have said, the court has broad powers under s 142 of the Act, including attempting to assist the parties to resolve proceedings.
To that end, the Court now orders that a fresh general meeting be convened to consider motions from Ms Perks in relation to the southern and eastern structures. The Court also directs that Ms Perks be given an opportunity to determine the form of the motions that will be put, including as to the intended design of the two structures.
I further direct that any written submission any lot owner, including the plaintiff, may wish to make with regards to the motions, be provided to Whittles at least 10 days prior to the meeting for Whittles to circulate to all lot owners.
Any response by any lot owner, including the plaintiff, to such submissions, be provided to Whittles at least five days prior to the meeting for Whittles to circulate to all lot owners.
I will hear counsel as to the precise terms of interim orders, and as to any ancillary matters.